Payments News Digest 24 March 2023

Indonesia: Authorities setting up credit-card network, following trend

In a move that sees it join the likes of India, Russia and Brazil, the central bank in Jakarta is reportedly close to completing development of a new national credit-card scheme for Indonesia, though no date has been set for a launch. Local banks will not be required to issue the card, but governmental departments and agencies will be mandated to use it. Credit-card penetration is low in the country, with less than one card for every ten adults, but Indonesia enjoys one of the fastest-growing major economies in recent years, with digital services booming.

"The credit cards market here has failed to keep step with the growing population," notes Argus Advisory Research's latest report on Indonesia : "Indeed, the market could fairly be described as stagnant." A new national network, with digital capabilities baked in at conception, could quickly change that. The country's National Payment Gateway, intended to process all electronic transactions in the country, was also envisioned by its architects as supporting infrastructure for a homegrown credit-card network, fast becoming a perceived must-have for developing nations in a geopolitically unstable world.

India: Full-steam ahead for Walmart's PhonePe on abundant opportunity

Investors the world over may be thinking more carefully about tech-centred companies for their investment but, in what is a clear testament to the scale of the payments opportunity in India, Walmart has upped its already-majority stake in PhonePe by a further $200 million. Earlier this month, the mobile-payments market leader announced that, on an annualised basis, it was now handling a trillion dollars' worth of transactions.

The company, among other business lines, now plans to build an account-aggregation business, having procured in-principle approval from the central bank for that role, which allows it to accept payments on behalf of merchants. Lending is one of the other offerings slated for development using the funds influx, although founder and chief executive Sameer Nigam professes to be under no illusions about the risks: successful payments companies, he told India's Economic Times in 2021, "need to be careful because lending is a completely different ballgame".

US: Consumer sentiment declines as war on inflation takes toll

The swift ratcheting up of interest rates by the Federal Reserve in the past four quarters, now in its ninth iteration, is increasingly divisive following the banking crisis that has blown up in recent weeks. Could the financial health of the American consumer, so key to the country's overall economic performance, take a dip also?

US consumers have been remarkably resilient, but the sub-prime category is potentially swelling on the effects of dearer debt and higher prices. Fresh state-of-the-consumer data from official sources is eagerly awaited: in the meantime, yet-to-be-finalised survey data from the University of Michigan surprised economists by producing a consumer sentiment index score of 63.4, below their Reuters-collated expectation of 67 (and far below the 100-plus level of 2019). The survey, an influential bellwether, was conducted before SBV's collapse.

Other stories of interest this week...

China: Tencent returns to growth as market emerges from Covid lockdowns
Switzerland: New owner UBS plans to keep Credit Suisse's domestic retail unit
US: How Payment Banks could prevent the next lender collapse
US: Regulatory response to SVB won't just impact regional banks

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